Capital gains tax discounts undermine affordability and must be reformed

MEDIA RELEASE

for immediate release 5 August 2015

Case for tax reform on housing grows

Affordable housing peak body National Shelter has renewed its call for tax reform on housing, citing figures released by Greens leaders today.

Figures prepared for the Greens by the Parliamentary Budget Office show potential revenue savings of between $74b and $127b over ten years by reforming Capital Gains Tax Discounts introduced in 1999.

National Shelter has argued that the discounts, introduced by the Howard government, are over generous but also have perverse impacts on property markets.

“CGT discounts combine with negative gearing to encourage speculative investment in rental property, inflate house prices and do very little to add new supply,’ according to National Shelter Executive Officer Adrian Pisarski.

“By providing unnecessary incentives to investors who compete for the same limited supply of property with owner occupiers, these measures have helped inflate prices and reduce owner occupation levels.”

“Nor have they kept a lid on rents as rents have risen faster than CPI, faster than incomes and put hundreds of thousands of households into poverty.” Mr Pisarski added.

National Shelter has supported measures suggested by the Henry Tax review to reduce the benefits of CGT discounts and negative gearing but today’s figures suggest more may be done.

“The figures released today show all parties must relook at reviewing the tax treatment of housing.”

“With a million households in housing stress and over a hundred thousand experiencing homelessness we need additional funding for affordable housing programs and expanded homelessness responses.”

“So far we have only seen cuts and delays to housing assistance and denial of the need for reforms in these areas.”

“The government is also considering withdrawing from housing when we need additional spending and these figures show where the money might come from. We congratulate the Greens on this initiative.” Mr Pisarski concluded.